Smurfit eyes full takeover of K Club at knock-down price of €10m
Published 08/02/2012 | 05:00
Price Michael Smurfit and Gerry Gannon paid for K Club seven years ago
MICHAEL Smurfit is in talks to win complete control of the K Club at a knock-down price from business partner Gerry Gannon and NAMA.
A source close to the talks denied reports that the paper magnate has offered to pay as little as €10m for Mr Gannon's stake in the country's most prestigious golf club but refused to offer a guide price.
Mr Smurfit and Mr Gannon paid €115m for the resort seven years ago. Mr Gannon's empire is now being sold off and NAMA is close to a £100m (€119.9m) deal to sell his UK property empire.
Mr Gannon's stake has been on the market since 2010 and price expectations have plunged from the €60m for which he was originally looking.
The fire sale of his half share in the K Club is a far cry from the years when the K Club epitomised the Celtic Tiger boom. Back then, membership costs soared to €88,000 and billionaire developers rubbed shoulders with characters as diverse as former US president Bill Clinton and singer Ronan Keating.
The luxury hotel and Arnold Palmer-designed golf courses saw off competition from across Europe to host the Ryder Cup golf tournament in 2006.
NAMA will have the final say on any deal agreed between the pair however. That's because Mr Gannon is selling his stake as part of a business plan agreed with the debt agency. NAMA has a veto over the prices accepted for any property sold.
A takeover deal at a knock-down price would be bitter sweet for Mr Smurfit. It will give him back control of the club he founded in 1991. However, it will also crystallise the gap between current prices and the boom-era price he paid for the now loss-making resort.
Some of that money has been made back, especially through the sale of trophy homes on the grounds of the club. Mr Smurfit and Mr Gannon are reckoned to have sold more than €150m worth of houses and apartments at the height of the boom when prices for the homes ranged in price from €1m to over €5m.
Since then the tide has turned against the club. Accounts for Bishopscourt, the company that owns the business show losses of €6.5m in 2009, and loans of €55m owed to NAMA in addition to Mr Gannon's NAMA debts.
In London, NAMA and Mr Gannon are holding talks with a number of bidders for a portfolio of 38 UK properties also owned by the Irish developer and backed by NAMA loans.
UK property developer Development Securities has confirmed that it is in discussions to buy a number of assets from NAMA. British trade magazine 'Property Week' said Development Securities had partnered with property investor Pears Group to buy the properties. The magazine added that Palmer Capital and Cannon Estates were also in the race to buy the assets.
Gannon Homes was one of the biggest home builders during the boom. Up to €1bn of loans linked to Mr Gannon have been transferred to NAMA.